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Venezuela Devaluing Currency to Revive Economy

A soldier walks through the Exito hypermarket branch in Valencia, Venezuela, as government officials take over management of the French-owned store, accusing it of price speculation following the country's currency devaluation, Jan 19, 2010 (file photo)

Venezuela is devaluing its currency again and setting a single exchange rate for the U.S. dollar in an effort to revive the sluggish economy.

Finance Minister Jorge Giordani said Thursday that Caracas will have the single exchange rate starting Jan 1, 2011, fixing it at 4.3 bolivars per dollar.

Venezuela has been using a higher rate of 2.6 bolivars per dollar for selected imports, including food and medicine.

Giordani said the move should help the country's economy grow in 2011.

This past January, President Hugo Chavez announced a devaluation of the bolivar, the first since 2005. He also introduced the dual exchange rate at that time in an attempt to propel non-oil exports. The country's economy, however, has continued to falter.

New data from the country's central bank shows Venezuela failed to pull out of recession in 2010, with the economy shrinking 1.9 percent, led by a 2.2 percent decline in the oil sector. Venezuela's economy shrank 3.3 percent in 2009.